STAR Scorecard: Loan Servicer Performance Metrics Explained

Lastrnweek Fannie Mae announced the Servicer Total Achievement and Rewards Program orrn”STAR” which is intended to measure and evaluate the performance of servicerrnactions in helping homeowners avoid foreclosure.  STAR’s initial component, the ServicerrnPerformance Scorecard, will provide regular snapshots and trends for keyrnperformance indicators to help servicers effectively assess their own progress.  This week MND had the opportunity to obtainrnmore details from Leslie Peeler who heads up the program.  </p

Peelerrnsaid that the scorecard measures how well servicers are fulfilling theirrnobligation to help distressed borrowers but places no further reporting burdenrnon the servicers.  Fannie Mae isrncurrently in the process of using the scorecard and 2010 data to show servicersrnhow well they met performance goals in this area over the past year. Goingrnforward, the scorecard information will be transmitted to servicers on a monthlyrnbasis.</p

Thernscorecard covers four performance categories: </p<ul class="unIndentedList"<liRollrnrates. Measures loans progress throughrnthe various stages of delinquency. </li<liSolutionrndelivery. The number of borrowers assisted,rnthe number of borrowers who are able to retain their homes, and the number ofrnloans liquidated (via deed-in-lieu or pre-foreclosure sale but not throughrnforeclosure), as a ratio of the universe needing help. </li<liWorkoutrneffectiveness. How many loans that werernmodified are still performing in three, six, and 12 months? Was the right solution prescribed and wasrnfollow-through appropriate?</li<liTimernline management. Were actions performedrnefficiently? How long did it take to initiaterna foreclosure or retention action? Howrnlong did a loan remain in seriously delinquent status? </li</ul

Loansrnare matched against a like set of loans so that reasonable comparisons ofrnservicer performance can be made.</p

Peelerrnsaid that details are still being worked out as to how top servicers will be recognizedrnand appropriate incentives and rewards.  “Thernprogram is designed to identify, recognize and reward top performers,” shernsaid.   “However it will alsornidentify those servicers not meeting expectations. Consistent with currentrnpractices, penalties are to be handled outside of the STAR Program.”</p

 A second aspect of STAR will be announcedrnshortly. This will be a servicer capability model which will provide metrics tornmeasure servicers’ internal processes.  

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